Weekend payroll-tax-cut talks fail

A weekend of talks between the two top tax writers in Congress failed to bridge gaping partisan differences over the payroll tax cut package, increasing the odds of another Washington showdown ahead of an end-of-the-month deadline.

Senate Finance Committee Chairman Max Baucus (D-Mont.) and House Ways and Means Chairman Dave Camp (R-Mich.) traded offers throughout the weekend in an attempt to cut a deal on extending the payroll tax holiday and jobless benefits for millions of Americans — along with avoiding a rate cut for physicians who treat Medicare patients.

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Talks appeared to turn sour late Sunday. Several GOP aides began portraying their Democratic counterparts as unserious, saying Baucus is being held back by President Barack Obama and Senate Majority Leader Harry Reid (D-Nev.).

A GOP aide familiar with the talks said Democrats have “walked back” offers, including allowing spectrum sales and higher co-pays for federal civilian pensions to pay for jobless benefits. Reid, according to several Republican aides, pushed for an increase in Transportation Security Administration fees.

“They are just not serious,” the Republican aide said, “which makes it hard to avoid the conclusion that they are trying to scuttle the negotiations to provoke a fake crisis for political gain.”

Several Democrats dismissed that characterization, saying Republicans were holding up a deal by refusing to negotiate seriously over taxes, demanding to cut Medicare and calling for unrelated policy riders.

“By anonymously leaking faulty information while talks are still going on, Republicans are yet again showing that they simply do not want to extend this tax cut for middle class families,” said Adam Jentleson, a spokesman for Reid. “Democrats will continue working to extend this middle class tax cut, and Republicans will rightfully get blamed if Americans see their taxes go up on March 1.”

A senior Democratic official with knowledge of the talks added: “Everyone knows the Republican leadership has long had trouble getting their caucus to support this middle class tax cut and is clearly still figuring out ways to do so. We are continuing to work with them to get this done and remain open to a number of different avenues to get there.”

Sources familiar with the talks said the two sides made progress on a plan to extend the unemployment benefits but were still far apart on paying for the so-called doc fix and the payroll tax cut, a package that could cost $160 billion. Late Sunday, aides in both parties said the talks were ongoing as Baucus was reviewing a new offer from Camp.